AUDUSD Tests Essential Support of Previous Lows
07 September 2022
The Australian dollar was down another half a percent on Wednesday, trading at two-month lows near 0.67 as sentiment remains pessimistic.
Chinese data weigh
Chinese data, which was previously disclosed, increased concerns about a worldwide downturn by revealing that exports sharply decreased in August as global demand began to drop.
According to official customs data, exports increased by 7.1% year over year in August, down from 18.0% in July, when experts had anticipated a 13.0% growth. Growth in imports also decreased, from 2.3% in July to 0.3% today. A 1.1% growth rate was predicted by consensus.
Compared to a record 101.26 billion USD in July and a consensus projection of 92.7 billion USD, the trade balance came in at 79.39 billion USD.
Seasonally adjusted exports were down 6.4% month over month, down from 0.6% in July, while imports decreased 4.8%.
Craig Botham, the chief China+ economist at Pantheon Macroeconomics, said: "We have been expecting weaker exports for some time, given the global slowdown evident in other country trade data, with China’s own data distorted by the Omicron lockdown and reopening. Subsidies for exporters have likely also played a role in delaying the inevitable.
Australian GDP coming in mixed
Moreover, the Aussie remained lower after quarterly GDP of 0.9% compared to 1.0% predicted and 0.8% previous reading, despite Australia's second quarter yearly change increasing 3.6% from 3.5% market consensus and 3.3% previously.
The Australian dollar also disregarded Treasurer Jim Chalmers' price-supportive remarks, which read, "There are still considerable reasons to be hopeful about the economy."
The Aussie is now testing previous cycle lows near 0.67. If bears push the price below that support, large stop losses could be triggered, likely dragging the price further lower, targeting the 0.65 mark.
Alternatively, the AUDUSD pair must advance above the short-term bearish trend line above 0.6830 to cancel the immediate selling pressure.